Regulation of Broker-Dealers and Securities - State Authority over Federal Covered Securities

A state administrator cannot require the registration of federal covered securities in the state. Federal covered securities include any of the securities listed below:

  • Exchange-listed Securities - This refers to any security listed on the New York Stock Exchange, American Stock Exchange or Nasdaq, as well as senior securities (such as preferred stocks and bonds of a company whose stock is so listed).

  • Investment Company Shares - This refers to mutual fund shares issued by a registered investment company and sold to qualified purchasers (an individual with at least $5 million in investments or investment managers with at least $25 million in assets under management).

  • Initial Public Offerings - A state administrator cannot require registration of IPOs, but they can require a notice filing in the state and a payment of a filing fee.


Exam Tips and Tricks
Questions about securities registration tend to be very straightforward. Remember that only two questions involving securities registration are scheduled to be on the exam. Here are two likely questions involving exempt securities or transactions:

Which of the following securities is NOT exempt under the Uniform Securities Act?

  1. Limited partnerships
  2. Convertible bonds of a NYSE-listed company
  3. U.S. Treasury bonds
  4. Stock issued by a nonprofit organization

The answer is A, since all the other options listed are specifically exempted.

  1. ABC Corporation has never previously issued securities registered by the SEC. It can register in the state by which method(s)?
    1. Registration by filing
    2. Registration by coordination
    3. Registration by qualification
    4. Registration by administration
    1. I only
    2. II only
    3. II and III
    4. I, III & IV

The correct answer is C, since registration by filing is only available to companies that have previously registered securities with the SEC, and registration by administration is not a valid registration method.

Introduction


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